Tag: housing

Advertiser Disclosure

Featured

4 Lessons We Learned from Buying Our House at an Estate Sale

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Newlyweds Laura and Chris Mericas, pictured above, stumbled upon their dream home at an estate sale in Houston, Texas. “We were never wanting to buy a brand new house,” Laura told MagnifyMoney. “We knew that whatever house we got, we would want to do work.” Photo courtesy of Laura and Chris Mericas.

Around a year ago, newlyweds Laura and Chris Mericas were eager to purchase their first home in Houston, Texas. It didn’t take long before they realized homes in the neighborhoods they liked were out of their budget, so they put home buying on hold. Laura and Chris aren’t alone — like other millennials, they’re being priced out of markets across the country. Homeownership among millennials is lower than decades past: For those under 35, 39% owned homes in 1995, compared to 43% in 2005 and just 31% in 2015, according to the U.S. Census Bureau.

On the off chance that he might come across a good deal, Chris, 26, continued to look at realtor websites. A year later, he happened upon a home in the Garden Oaks-Oak Forest neighborhood in Northwest Houston that piqued his interest. The property — a three-bedroom, one-bathroom fixer-upper — was listed as part of an estate sale, and it was within their maximum budget of $350,000. They made their move.

“We found the house on a Monday and had an offer accepted by Friday,” Chris says.

But the journey was far from smooth. Here’s what they learned along the way.

You can’t judge a house by its cover photo

Browsing through realtor photos of the house online, Laura wasn’t exactly impressed. Driven by the price point, however, they decided to give it a shot.

They were pleasantly surprised.

“Because it was an estate sale and because the people selling it weren’t super motivated [to stage the home for photos],” says Laura, 25. “For whatever reason, the pictures online were awful.”

The home had belonged to a man who was born in the house and purchased it after his parents died. He had rented the home out and planned on permanently moving into the house before he passed away. It was his children who decided to sell rather than continue renting it out.

Laura says she thinks because the home was a rental property, the children were even more eager to sell it. Brian Davis, a real estate investor, says family members eager to sell estate sale properties is common.

“The adult children typically want to sell the property as quickly as possible, since it will continue to accrue costs while it sits vacant,” he says. “Mortgage payments, taxes, insurance and maintenance all add up quickly. These adult children often don’t have as strong of an emotional attachment to the house as live-in owners do, and are less likely to be offended by low offers.”

Emotions will inevitably add complications

Despite the children not being attached to the home, Laura, a freelance journalist, and Chris, a mechanical engineer, still felt unsure how to act during negotiations.

“I think the fact that it was an estate sale made it different on our end,” Chris says. “In the negotiation phase, we were a little conflicted. We don’t want to belittle the fact that they just lost their father … but in addition to that, we wanted to play off the fact that they weren’t selling this house to buy another house. It was extra income that they weren’t expecting because their father died at a young age.”

There were other offers on the table, but most were from professional house flippers who were offering land value only, so theirs was accepted quickly.

A good home inspection is everything

Laura and Chris first found their new home in early March, and they closed on April 24. All in all, the whole process took around 50 days.

“It was a pretty stressful two weeks at the beginning, getting all of our paperwork and getting all of our employment records to get the loan,” Laura says. They both had strong credit scores and were already pre-approved for a mortgage because they had looked into buying a home a year earlier, which helped speed up the process.

But it wasn’t all smooth sailing.

“We had to scramble to get the inspection done,” Laura says. The couple initially asked for 10 days to get the appraisal done, but then asked for a two-day extension because a lot of inspection companies were closed for spring break.

After their initial offer was accepted, inspectors came to look at the home and found it was rife with problems: outdated and dangerous electrical wiring, plumbing troubles, and holes in the sewer line. The inspectors said it would cost around $20,000 for these repairs, so Laura and Chris sent a second offer that took these costs into consideration.

Their offer was accepted immediately.

Fixer-uppers require a lot of imagination — and cash

In most home sales, the property is tidy and beautifully staged. Laura and Chris discovered this wasn’t the case in their estate sale. “I feel like when people are trying to sell their house, they might try to spruce it up a bit in the months leading up to it,” Laura says. “There was definitely none of that. It was dirty. There was dog hair.”

So they used their imagination. Laura and Chris always envisioned purchasing a home in need of renovation and a little TLC, so the problems with the house didn’t faze them. “We were never wanting to buy a brand new house,” Laura says. “We knew that whatever house we got, we would want to do work.”

After completing around $20,000 in necessary home renovations after closing, Laura and Chris moved in early June. Although it’s been a whirlwind few months, the couple feels lucky to have swooped in on the estate sale at the perfect moment. They say every other comparable home they saw in the same neighborhood about $75,000 more than what they paid.

“We saw an opportunity to get into the neighborhood with a steal,” Laura says. “Down the street, there are people building enormous houses. We would never be able to get into this neighborhood at that price ever again.”

Tips for purchasing a home from an estate sale

Kevin Godfrey, an agent with Douglas Elliman and the owner of Henry Laurent Estate Sales, shares his advice for purchasing a home through an estate sale.

  1. Use the estate sale as the open house. Go into the rooms, check the water pressure, inspect the foundation, and discreetly take measurements. Take your time and make sure it’s what you are looking for. A standard open house lasts for two hours, while an estate sale lasts for two days — eight hours each.
  1. If you get in early enough, the owner won’t have an agent yet. Dealing directly with them and only using real estate attorneys to finalize the transaction can save the owner the typical 4% to 6% agent fee.
  1. As with any purchase of a home, you’ll still want to do all of the necessary inspections and search the property records for liens or encumbrances.
Jamie Friedlander
Jamie Friedlander |

Jamie Friedlander is a writer at MagnifyMoney. You can email Jamie here

TAGS: ,

Advertiser Disclosure

Featured, News

5 Lies Your Landlord May Tell You

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Finding a place to rent can be so time-consuming and stressful that once you decide on a house or apartment that fits your budget, size, and location needs, you might not pay attention to the mundane lease terms or if the landlord is trustworthy.

However, if you have a shady landlord and lease agreement, you could pay more for your rental and be stuck handling repairs.

Andrea Amszynski, a speech therapist, thought she had a perfect situation when she found a room for rent in a five-bedroom, three-bath house when she was moving to Savannah, Ga. The room was advertised on Craigslist, and she made an appointment to view the house.

“I met the landlord, or who said he was the landlord at the time,” she says. “And he showed me all round the house.”

She signed a lease and put down $700, which included one month’s rent and a security deposit. A few weeks later, when she couldn’t get hold of the landlord, she discovered the man she paid wasn’t the landlord, but a past tenant scamming her. She filed a police report, but was unable to recover her deposit.

 

Though this is a fairly extreme case, there are other ways that landlords mislead tenants. At a time when half of renters spend at least 30% of their household income on rent and utilities, being on the lookout for these lies may keep you from spending more than you need on living expenses.

“You can break your lease any time you want.”

Another term buried in the lease that could cost tenants in the long run is “contract renewal terms.” In this situation, the rent agreement is renewed for another year if the tenant doesn’t inform the landlord within a certain period — typically 60 days — from the end of the first agreement.

“Then, if you want to get out of what they’ve written, you’ve got to pay so much money … like a whole month’s rent,” says Sarah Hubbuch, who manages two properties in Georgia and Florida.

“You’ll have to cover the cost of that repair.”

Repairs are inevitable, such as a clogged toilet, leaky pipe, air conditioning unit that blows out warm air, broken refrigerator, or burned-out light bulbs. However, problems can arise about who should pay for the repair and how quickly the repair needs to be done.

Hubbuch says things such as appliances, water heaters, or anything that could need repair after normal wear and tear should be a landlord’s responsibility to fix and cover financially.

“It’s part of the contract,” she says. “And me, personally, I would tell the landlord I can’t pay rent until these things are fixed.”

But that also may mean you’ll have to buy fans until the landlord decides to fix the AC or pick up a pack of new light bulbs.

“I can give you your security deposit back whenever I want.”

Joel Cohn, legislative director for D.C’s Office of the Tenant Advocate, says inappropriate deductions from security deposits are a common complaint filed by tenants.

“An appropriate deduction from the security deposit would be something beyond ordinary wear and tear,” he says. “So, if the tenant caused some damage to the property, then it would be appropriate for the landlord to make that deduction.”

As a property manager in California, David Roberson says the traditional security deposit of one month is more than enough for repairs. He is principal of Silicon Valley Property Management Group, which manages apartments for rent in San Jose, California.

“Most of the time, tenant damages are less than $1,000 to a unit when they’re leaving, so if you get a $5,000 security deposit (typically up to two months’ rent), that’s going to be fairly adequate to cover 99% of the damages,” he says.

If there is no damage, a tenant should receive their security deposit back in a timely manner. Depending on the state, that time frame can change. For example, in Washington, D.C., landlords have to provide the tenant with an itemized list of deductions to cover appropriate expenses. The list needs to be sent to the tenant within 45 days after they move out, and the price tag attached to repairs needs to be reasonable. Landlords then must return the remaining balance to the past tenant in an additional 30 days after the tenant received the list.

Check your state’s rental guidelines on security deposits to be sure you know when to expect your deposit back.

“I can come and go as I please.”

Understandably, a landlord may need to enter the rental at some point during the lease. Each state has its own rules for under what circumstance and with how much notice they would need to give tenants before entering the property.

“When a tenant signs a lease, they actually hold the rights to the leasehold,” Roberson says. “So for the term [of the lease], it’s their property.”

In California, he says, landlords need to get written permission to enter a property, or there has to be reasonable evidence that the tenant is violating terms of the lease, is doing something illegal, or there is an emergency.

Cohn says that in other states and D.C., generally landlords need to give a “reasonable” written notice 48 hours ahead of time in non-emergency situations.

“I can get you a great deal on the rent.”

While some parts of the lease can be clear, some landlords will try to bury items in the lease that could cost tenants.

One practice is known as concession pricing.  Cohn says he has seen this tactic used in rent-controlled buildings in Washington, D.C.

Here’s how it works: The amount for a one-bedroom apartment is $1,500, but that’s a high rent for the area. The landlord advertises it for $1,000 to attract potential renters, but reports the $1,500 to the rent administrator — the office in some large cities that controls rent — and then buries the $1,500 amount in the lease.

The landlord essentially is telling the tenant, “Yeah, this $1,500 amount, don’t worry, we’re going to give you a concession deal. You only have to pay $1,000. And, by the way, this is rent controlled, so you’re protected in terms of the amount of rent increase,” Cohn says. However, if the tenant decides to renew their lease, they may see their rent not just go up to $1,500, but $1,500 plus the rent control cap for the area. The landlord would legally be allowed to raise it that much since they told the rent administration that they were already charging $1,500 for rent.

Tips for protecting yourself as a renter:

Research your landlord before signing the lease.

Ask current tenants about their experience with the landlord. In some instances, you also may find landlord reviews online through sites such as Yelp and Review My Landlord. And if you want to confirm that the person is indeed the landlord, look up the property record online to find the owner’s name. “Most of the time the landlord should be paying the property tax, and that is public info,” Amszynski says.

Get everything in writing.

Read the lease thoroughly and ask about any lingo or terms that are confusing. In addition, get any verbal agreements, such as rental rates or promises to repair items before you move in, in writing. Protect your security deposit before you move in by walking through the rental with the landlord. “Make sure that you and the landlord go through the list of things that were already wrong with the house before you move in so they can’t come back and say you did it,” Hubbuch says.

Know tenant rights for your area.

A Zillow study in 2014 found that 82% of renters don’t understand laws on security deposits, credit, and background checks, 77% of renters don’t understand privacy and access rights, and 62% of renters don’t understand laws on early lease termination.You’ll be able to find resources online that outline tenant rights and landlord rights in your state. The Washington, D.C., Tenant Bill of Rights and the California Tenants guide are two examples of guides.

Get insured.

Renters insurance covers damage to your belongings inside a rental, but only 41% of renters said they had renters insurance, according to 2016 data from the Insurance Information Institute. Premiums average $15-$30 a month, depending on the size and location, and the average U.S. premium for renters insurance is $190 for 2014 — the most recent year available — according to the National Association of Insurance Commissioners. A standard renters insurance policy also covers your liability for injuries to someone else or their property while they are at your rental, but it doesn’t cover damages you might make to the property. Roberson says he requires his tenants get tenant liability insurance to cover up to $100,000 in damages from situations such as a fire or driving cars into garage doors. He offers it to them for $14.50 a month. The Insurance Information Institute notes an excess liability policy generally costs between $200 and $350 annually, which provides an additional $1 million of protection.

Jana Lynn French
Jana Lynn French |

Jana Lynn French is a writer at MagnifyMoney. You can email Jana Lynn here

TAGS: , ,

Advertiser Disclosure

Featured, Life Events, News

More Rich People Are Choosing to Rent Than Ever Before — Here’s Why

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Renting a home or condo has become a status symbol for some wealthy Americans.

Karen Rodriguez, an Atlanta, Ga., real estate agent, says people frequently contact her who are interested in condos renting for $10,000 to $15,000 a month in properties such as the Ritz-Carlton Residences, which have floors of condos above upscale hotel rooms.

“I do see a lot of high-net-worth renters,” says Rodriguez, with Berkshire Hathaway HomeServices Georgia Properties. “They have the disposable income to pay top dollar.”

Renter households increased by 9 million during 2005-2015, reaching nearly 43 million in 2015, according to the State of the Nation’s Housing report, an annual study by Harvard University’s Joint Center for Housing Studies that analyzes U.S. Census Bureau data. Of those, 1.6 million renter households earn $100,000 or more, representing 11% of all renters.

“Indeed, renter households earning $100,000 or more have been the fastest-growing segment over the past three years,” the report stated.

Here are four reasons why high earners are choosing to rent.

They’re frustrated with market trends.

stock market numbers and graph

Rob Austin, a biotech account manager in the Los Angeles area with a household income of over $350,000, rents a 1,700-square-foot townhome with his wife and two children.

In the last 10 years, 1.2 million households that earn $150,000 became renters, up from 551,000 in 2005. Using data from the U.S. Census Bureau’s 2015 American Community Survey, RentCafe.com reported in late 2016 that “wealthy households” that earn more than $150,000 annually increased by 217%, compared to an 82% rise in homeowners in the same income bracket.

The $150,000-and-up dollar amount served as the benchmark for “wealthy” renters because that’s the top of the bracket used in the American Community Survey to identify renters and homeowners.

Even when they had their second child in 2016, Austin says they were more steadfast to keep renting the two-bedroom, two-and-a-half bath townhome instead of buying. Prices are increasing so much that they’re “priced beyond perfection,” he says.

“It’s gotten worse,” he says. “Everything is mispriced at this point.”z

They want the next best thing.

Some buyers’ mindset is, “I don’t love it, so I’m just going to go rent a house,” says Atlanta, Ga., real estate agent Ben Hirsh.

Some may be bored with what’s on the market and are holding out for a home or condo with even more extravagant features or amenities. “They’re not happy with what’s out there,” says Rodriguez, also founder of Group Kora Real Estate Group, which sells new and luxury condos.

If they’re in a location or price range that’s hot, they could get more for their home if they sell now. Some wealthy homeowners take advantage of the resale market by going ahead and selling a home or condo and biding their time while renting. For example, if they’re sold on news about ultraluxe condos that have been announced, but are not under construction, they don’t mind renting in the interim.

“People think there’s more coming,” Rodriguez says.

Some clients have so much wealth that they’re willing to pay for the entire year up front for an unfurnished condo, she adds. Investors also have noticed the market trends and are buying condos for $1 million to $2 million with the intention to rent them out.

They don’t want a long-term commitment.

retirement retire millionaire happy couple on the beach

Some wealthy homeowners are ready to sell their million-dollar estates for a lock-it-and-leave-it lifestyle, but aren’t sold on townhome or condo living.

Instead, they’re willing to spend what can amount to the down payment on a starter home for monthly rent to experience the luxury condo lifestyle with privacy and ritzy amenities, like 24/7 room service and spa access.

“They want to test out a high-rise,” Rodriguez says. “They are people who definitely can afford to buy.”

A 2016 report by the National Association of Realtors identified the top 10 markets in the U.S. with the highest share of renters qualified to buy. The study analyzed household income, areas with job growth above the national average, and qualifying income levels (a 3% down payment in each metro area’s median home price in 2015) in about 100 of the largest U.S. metro areas. The markets that are above the national level (28%) were:

  • Toledo, Ohio (46%)
  • Little Rock, Ark. (46%)
  • Dayton, Ohio (44%)
  • Lakeland, Fla. (41%)
  • St. Louis, Mo. (41%)
  • Columbia, S.C. (41%)
  • Atlanta, Ga. (40%)
  • Columbus, Ohio (38%)
  • Tampa, Fla. (38%)
  • Ogden, Utah (38%)

The short-term mentality also may be the nature of the industry that brings people to a city. Some prospective renters whom Rodriguez meets are planning to live in Georgia for a couple of years because of work, such as jobs in the growing entertainment sector. Films such as the “Avengers” and TV shows such as “The Walking Dead” shoot in metro Atlanta.

They don’t want to live out of a suitcase in a hotel and have the income to afford high-priced rentals, joining political figures and international executives who also are among those making the same choice, Rodriguez says.

They want cash in the bank.

Townhomes sell for about $800,000 in Austin’s neighborhood in California. To make a 20% down payment, he’d have to shell out $160,000 up front.

“Why would I want to tie up $160,000 in cash in an asset that most likely is not going to go up a lot more — and more than likely has topped and has nowhere to go but down in the next cycle?” Austin asks.

Austin says he’s not wavering from his decision, although he’s “taking heat” from friends since he has the income to purchase a home.

“We’re bucking the trend by saying, ‘No thanks, we don’t want to play (the real estate market),’” he says. “We’ll just wait.”

Lori Johnston
Lori Johnston |

Lori Johnston is a writer at MagnifyMoney. You can email Lori here

TAGS: , ,

Advertiser Disclosure

Featured, News

This Family Spent $6,000 to Save Their Home and Still Wound Up Facing Foreclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Lageshia Moore of Far Rockaway, N.Y. says her family spent $6,000 in hopes it would save them from foreclosure. “Some people might say, ‘OK, just get a new house.’ But it wasn’t that simple,” says Moore.

When Lageshia Moore and her husband found their home in 2006, they thought it would be a perfect place to raise their family. The $549,000 Far Rockaway, N.Y., duplex even had future income potential if they could find a reliable tenant and rent out one half of the house.

In order to purchase the property and avoid primary mortgage insurance, the couple took out two mortgages to cover the costs.

Like millions of Americans who purchased homes at the peak of the housing bubble, their timing could not have been worse. Moore, a teacher, left her job in 2007. It soon became impossible to meet their $4,000 total monthly mortgage payments. By the summer of 2008, they were deep in default, and the recession sent their home value plummeting.

They were officially underwater on their house, and the family was living solely on Moore’s husband’s income as a driver. Eventually, they were notified that their lenders had begun the foreclosure process.

“Some people might say, ‘OK, just get a new house.’ But it wasn’t that simple,” Moore said. “This was the house where we were raising our family. My husband is very proud and homeownership means a lot to him — so we weren’t going to just let it go.”

Instead, Moore and her husband did what many families facing foreclosure do: They began looking desperately for “foreclosure relief” companies, law firms, and groups who promised help. A nonprofit connected them to a court-appointed attorney, but it didn’t stop the foreclosure process. So they turned to companies that advertised foreclosure relief on radio stations and online.

Over the course of six years, the family handed over thousands to a handful of relief groups they thought could stop the foreclosure. “We were desperate, and we thought, ‘OK, we’ll hand over this money to someone and they’ll just fix it,’” Moore said.

One of those foreclosure relief companies was Florida-based Homeowners Helpline, LLC. In 2015 the family gave the company a total of $6,000: an initial $2,000 down payment, and then $1,000 in four monthly installments. By that time Moore had found a new job, but the family hadn’t paid the full mortgage amount in years.

Moore shared the contract with MagnifyMoney, in which Homeowners Helpline says it will “perform a mortgage loan review and audit,” including actions like sending a cease-and-desist letter and a “Qualified Written Request” for information about the account to the family’s lenders.

Here’s what Moore says happened: Homeowners Helpline connected her family with a New York City lawyer who “kept asking for endless paperwork, month after month after month,” and who eventually stopped answering their calls, she claims. They finally got in touch with him just before the house was set to go up for auction, she said, and he told them the efforts to stop the auction had failed.

“We were horrified,” Moore said.

Homeowners Helpline told MagnifyMoney a different story. Sharon Valentine, a processor at Homeowners Helpline who worked on Moore’s husband’s case, said the family was slow to hand over needed paperwork and “unrealistic about their expectations.”

Crucially, Valentine said, the family didn’t tell Homeowners Helpline the house was actively in foreclosure until they mentioned the auction. “And then it was like, ‘Wait, what?’” Valentine said. The company would have taken different actions had they known about the foreclosure proceedings, she added.

“We can’t help you effectively if you don’t give us all of the information and the paperwork,” Valentine said. “In general, some clients come in and they hear their friend was able to get a 2% [mortgage] rate or cut their payments in half, and it’s like, ‘Well, that’s a very different situation.’ We try to help educate, but sometimes you can’t change that expectation.”

The Best Help is Free

But there is a free resource to educate panicked homeowners about expectations and provide foreclosure assistance — as well as help them avoid scam companies that will steal their money. NeighborWorks America runs LoanScamAlert.org, which aims to be a one-stop shop for people with questions about or problems with their mortgages.

The Loan Modification Scam Alert Campaign launched in 2009, when Congress asked NeighborWorks America to educate and help homeowners. LoanScamAlert.org offers resources including information about how to spot and report scams, and lists of trusted authorities who can help. Its main goal: Drive people to call the Homeowner’s HOPE Hotline, at 888-995-HOPE (4673), which is staffed 24 hours a day by counselors who work at agencies approved by the U.S. Department of Housing and Urban Development (HUD).

“We provide them with a single, trusted resource,” said Barbara Floyd Jones, senior manager of national homeownership programs at NeighborWorks America. “It gets confusing when you see companies with all of these similar names advertising on the radio or TV, and then you have to research them. We want to let people know they don’t have to pay a penny for assistance.”

Anyone — regardless of income or other factors — can contact the counselor network to receive free advice and help. Homeowners aren’t always aware of the myriad government-affiliated groups that can provide assistance, or of the federal and state programs created to speed loan refinances and modifications, Floyd Jones said.

“We can never promise that everyone will be able to save their home; there are a variety of circumstances,” Floyd Jones said. “But we can promise a trusted counselor will listen, take a look at your paperwork if you want, and tell you all of your options.”

In fact, if a homeowner grants permission, the counselor can contact the mortgage lender directly to discuss options to stop the foreclosure, modify the terms of the loan, or otherwise make a deal. If need be, homeowners will also be connected with vetted legal assistance — although Floyd Jones noted not every situation requires a lawyer.

True to LoanScamAlert.org’s name, the hotline counselors also take complaints about mortgage-related scams: third-party companies that take the money and run, or slip in paperwork that unwittingly gets homeowners to sign over the deed to the house.

The Federal Trade Commission received nearly 7,700 complaints about “Mortgage Foreclosure Relief and Debt Management” services in 2016 — down from almost 13,000 in 2014, but still a significant figure.

“Stopping phony mortgage relief operations continues to be a priority” for the FTC, said spokesman Frank Dorman.

Both the FTC and LoanScamAlert.org offer tips to avoid scams — and to make sure you’re taking advantage of all federal and state programs that could help.

Red Flags:

  • They ask you to pay before any services are rendered.
  • Pressure to pay a fee before action is taken, sign confusing paperwork, or hire a lawyer off the bat. As with any scam, fraudulent mortgage relief services rely on high pressure to push vulnerable homeowners into taking action. Companies shouldn’t ask for “processing fees” or “service fees” early in the process, Floyd Jones said, as early foreclosure-stoppage efforts don’t cost anything. Be wary of signing any document, as you could unwittingly surrender the home’s title or deed to a scammer.
  • They make promises they can’t keep. 

    Promises or guarantees they’ll save your home from foreclosure — or even claims like “97% success rate!” No one can guarantee results.

  • They say they’re affiliated with the U.S. government. 

    Companies that claim to have an affiliation with a government agency. Some scammers may claim to be associated with the government, charging fees to get you “qualified” for government mortgage modification programs like Hardest Hit Fund. You don’t have to pay for these government programs — and lenders, particularly big banks like Wells Fargo and Bank of America, may be able to offer you their own modification options directly.

  • They want you to send your mortgage payments to them.

    Companies that tell you to start paying your mortgage directly to them, rather than your lender. They may promise to pass the money along, but they could pocket it and disappear.Companies that ask you to pay them through unconventional methods: Western Union/wire transfers, prepaid Visa cards, etc., instead of a check. They’re trying to get your money in a way that’s hard to trace.

As for Lageshia Moore and her husband, the family ultimately filed for bankruptcy — a move that can stop the foreclosure process, but only temporarily — and are now working with a law firm on a loan modification she hopes will reduce their payments to a manageable monthly sum. In giving advice to others, she reiterates the simplest but most important tip: “Just do your research.”

“You’re panicked, but you have to do your due diligence,” she added. “Really sit down and weigh the pros and cons: foreclosure, short sale, etc. What does this process or contract really mean? It’s an emotional time, but you have to try to keep the emotion out of it. That’s what I would tell myself.”

What to Do if You’re Facing Foreclosure:

  • Call a HUD-certified counselor at 1-888-995-HOPE. You’ll get advice and help for free, and while counselors can’t ever promise to save a home, they’ll be happy to take a look at any paperwork or information about your case, contact your lender about options if you grant permission, and connect you with vetted legal assistance if need be.
  • If you’re not facing foreclosure yet, but you’re worried that you’re about to run into trouble, contact your mortgage lender’s loss litigation department. They may be willing to work with you. Your lender can also tell you whether you’ll qualify for government programs.
  • Overall, don’t let desperation stop you from taking the time to research any potential actions, including signing on with a relief company. Explore the company’s background and track record. Check online for reviews from other homeowners — and be sure to look up phone numbers too. Many scam companies simply shut down, reopen under a new name, and retain the same phone number.
Julianne Pepitone
Julianne Pepitone |

Julianne Pepitone is a writer at MagnifyMoney. You can email Julianne here

TAGS: , ,

Advertiser Disclosure

Mortgage

PMI Explained: What It Is and Why You Should Have It

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

PMI Explained: What It Is and Why You Should Have It

There’s a lot to consider when purchasing a home. Location, size, and cost spring to mind as three of the most important factors. Perhaps you’ve budgeted and figured out how much you can afford for a down payment, but have you also considered your total monthly mortgage payments?

If you’re applying for a mortgage and can’t afford to put at least 20% down, you may have to pay for mortgage insurance.

What is Mortgage Insurance?

Mortgage insurance helps protect the lender’s investment, not the homeowner.

A homeowner’s insurance policy may reimburse you for a variety of expenses, including vandalism, thefts, and environmental damage to your home. Mortgage insurance is a bit different. Although you are responsible for mortgage insurance premiums, the policy protects the lender.

Casey Fleming, mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage,” explains mortgage insurance “insures the lender against principal loss in the event you default, they foreclose, and the foreclosure sale doesn’t bring in enough money to cover what they’ve lent you.” In short, if you don’t pay your bills, the insurance company will help make the lender whole.

The 20% Down Payment Rule

Mortgage insurance isn’t required for all homebuyers. “Typically, homebuyers looking to get a conventional mortgage must pay PMI if they are making a down payment of less than 20%,” says Josh Brown of the Ark Law Group in Bellevue, Wash., which specializes in bankruptcy and foreclosures. Brown points out PMI serves a valuable function by allowing otherwise qualified homebuyers (with an acceptable debt-to-income ratio and credit score) to be approved for a conventional loan without the need for a large down payment.

How to Find Mortgage Insurance

Mortgage lenders will often find a PMI policy for you and package it with your mortgage. You will have a chance to review your PMI premiums on your Loan Estimate and Closing Disclosure forms before signing paperwork and agreeing to the mortgage.

Types of Mortgage Insurance

There are two main types of mortgage insurance: Private mortgage insurance (PMI) and mortgage insurance premium (MIP).

PMI helps protect lenders that issue conventional, Fannie Mae and Freddie Mac-backed, mortgages. You’ll often be required to make monthly PMI payments, a large upfront payment at closing, or a combination of the two. These payments are made to a private insurance company and are required unless you have at least 20% equity in your home. You may request to cancel your PMI once you have paid down the principal balance of your home to below 80% of the original value.

Mortgages issued through the Federal Housing Administration (FHA) loan program also require mortgage insurance in the form of a mortgage insurance premium (MIP). You will be required to pay an upfront fee at closing and an MIP every month as part of your monthly mortgage payment. Your MIPs depend on when your mortgage was finalized and your total down payment.

How Much Mortgage Insurance Will Cost You

How much mortgage insurance will cost you

PMI premiums can vary depending on the insurer, your loan terms, your credit score, and your down payment. The premiums often range from $30 to $70 per month for every $100,000 you have borrowed, according to Zillow.

Many homeowners’ monthly mortgage payments include their PMI premium. Alternatively, you might be able to make a one-time upfront PMI payment. Or, you could make a smaller upfront payment and monthly payments.

As we mentioned earlier, for an FHA loan, you will have to pay upfront mortgage insurance premium (UFMIP) which is generally 1.75% of your loan’s value. You may have the option of rolling this premium payment into your mortgage and pay it off over time. Your MIP depends on your down payment, the base loan amount, and the term of the mortgage and can range from .45% to 1.05% of the loan’s value. The MIPs must be paid monthly.

There are a few situations when you may be able to stop making mortgage insurance premium payments.

There are two eligibility requirements for conventional mortgages closed after July 29, 1999. As long as you’re current on your payments, PMI will be terminated:

  • On the date when your loan-to-value is scheduled to fall below 78% of the home’s original value.
  • When you’re halfway through your loan’s amortization schedule; 15 years into a 30-year mortgage, for example.

Your home’s original value is often the lower of the purchase price or appraised value. The current value of your home and your current loan-to-value aren’t figured into the above criteria.

You can also submit a written request asking your lender to cancel your PMI:

  • On the date your loan-to-value is scheduled to fall below 80% of the home’s original value.
  • If your current loan-to-value ratio is lower than 80%, perhaps due to rising home prices in your area or renovations you’ve done.
  • After refinancing your mortgage once you have at least 20% equity in the home.

Unlike PMI, if you have an FHA loan, your MIP may not ever be removed. The date your mortgage was finalized and the amount you put down determines your eligibility:

  • The MIP stays for the life of the loan for mortgages closed between July 1991 and December 2000.
  • The MIP will be canceled once your loan-to-value is 78%, if you applied for the mortgage between January 2001 and June 2013, and you’ve owned the home for five or more years.
  • If you applied after June 2013 and put at least 10% down, the MIP will be canceled after 11 years. If you put less than 10% down, the MIP stays for the life of the loan.

Refinancing an FHA loan to a conventional mortgage may provide you with additional options.

The Pros and Cons of Private Mortgage Insurance

There are a variety of pros and cons to consider when weighing the options of waiting to save a 20% down payment versus paying for private mortgage insurance.

Melanie Russell, a mortgage loan officer in Henderson, Nev., points out buying now can make sense if you expect home prices to increase or interest rates to climb.

What about waiting? In addition to avoiding mortgage insurance, putting more money down could lead to lower closing costs and a lower interest rate on your mortgage. Also, if you expect prices to drop, you’re saving on all the costs that could come with ownership, including taxes, mortgage, insurance, maintenance, and potential homeowners’ association fees.

In the end, it’s often a situational and personal choice. While Russell shared a few positives to buying early and paying for PMI, she also notes, “Only you can answer this question for yourself.”

When You Don’t Need Mortgage Insurance

There are also a few options that don’t require mortgage insurance, even if you can’t afford a 20% down payment.

For example, Veterans Affairs (VA) loans, offered to qualified veterans, don’t require mortgage insurance. You might not have to put any money down either, but these loans usually require an upfront payment at closing.

The Affordable Loan Solution program offered through a partnership between Bank of America, Freddie Mac, and the Self-Help Ventures Fund allows borrowers to put as little as 3% down without taking on PMI. Maximum income and loan amount limit requirements may apply.

You may also find some lenders willing to offer lender-paid mortgage insurance. You’ll pay a higher interest rate on the loan, but in exchange, the lender will make the insurance payments for you. “The math works differently every time,” says Fleming. “If a borrower thinks they won’t be in the property very long, [lender-paid mortgage insurance] might be a good choice, as sometimes the additional amount you pay is lower this way.”

However, if you’re in the home and paying off the mortgage for a long time, it could be more expensive than taking out a conventional loan with PMI. Because the premiums are built into your mortgage, you won’t be able to get rid of the extra payments after building equity in the home.

Another option could be to take out a second loan, called a piggyback mortgage. Although there are potential downsides to this route, you can use the money from the second loan to afford a 20% down payment and avoid PMI. Some people also borrow money from friends or family to afford a 20% down payment, but that could put your relationship in jeopardy if you run into financial trouble.

Finally, you might also discover lenders offering no-mortgage-insurance loans with a 10% to 15% down payment. As with the lender-paid mortgages, it’s important to review the fine print and the potential pros and cons of the arrangement.

Louis DeNicola
Louis DeNicola |

Louis DeNicola is a writer at MagnifyMoney. You can email Louis at louis@magnifymoney.com

TAGS: , , ,

Advertiser Disclosure

Featured

TRUMP VS. CLINTON: Where the Candidates Stand on Job Growth, Taxes, and Housing

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

TRUMP VS. CLINTON: Where the Candidates Stand on Job Growth, Taxes, and Housing

With the election a month away, presidential candidates Hillary Clinton and Donald Trump have just a few weeks left to woo voters across the U.S.

If you’re still on the fence about which candidate to vote for, your final decision may hinge on how their policy ideas could potentially impact your wallet.

We have simplified and broken down each candidate’s stance on three key issues — job growth, taxes, and housing — to help you understand exactly how each candidate’s proposals could affect your wallet.

Read more about their stances on college costs, health care, and family leave here > 

Jobs

hillary_final

 

Hillary Clinton plans to create new jobs by investing $50 billion in programs that promote youth employment, small business growth, and re-entry programs for the formerly incarcerated. She plans to invest another $50 billion in the Rural Infrastructure Opportunity Fund, a publicly funded initiative that seeks to invest in public infrastructure in rural areas to attract more businesses and, as a result, more jobs for the under- and unemployed.

Clinton is also a supporter of the “ban the box” movement to get rid of the box on applications that requires job seekers to select whether or not they have a criminal past. She has proposed banning such questions on applications for federal employees and contractors. She will also require companies to only consider criminal history when it is related to the job applied for and grant the right of appeal to those who are rejected because of a criminal past.

Clinton says she will invest $25 million in small business and private investment. She wants to do that through mentorship programs and by expanding federal funding for programs that target small business development.

Donald Trump

 

Donald Trump has said he plans to relax federal regulations in order to lower the cost of doing business for major corporations in the U.S., an effort he hopes will dissuade them from moving their business (and jobs) overseas.

Trump’s plan points to energy as a source for new jobs in the future. He says will make the U.S. the world’s dominant leader in energy production by scraping programs like the Environmental Protection Agency’s Clean Power Plan, a 2015 initiative led by President Obama to reduce carbon emissions and increase regulations on coal-powered plants. The plan has been stalled since February, when the U.S. Supreme Court agreed to hear a case that questions the constitutionality of the plan.

Taxes

Hillary Clinton

 

Clinton’s tax plan focuses on raising taxes on high-income taxpayers (the top 1%) and closing tax loopholes. Her plan also includes increasing estate and gift taxes. The majority of her proposed tax policies won’t affect the bottom 95% of taxpayers, according to the Tax Policy Center.

Part of Clinton’s plan is to raise taxes on higher-income taxpayers with a 4% “Fair Share Surcharge,” which would apply to those making $5 million or more annually. She also says she’ll close tax loopholes favored by the wealthiest earners in part by supporting the Buffett Rule, which would levy a 30% income tax on any individuals earning $1 million or more. The Tax Foundation, a nonpartisan research group, has warned that such a plan would provide a meager boost to tax revenue.

In addition, Clinton wants to restore the estate tax to its 2009 level. Doing so would increase taxes on multi-million dollar estates — to as much as 65% for an estate valued at more than $1 billion for a couple — and close loopholes that deflate the value of the estates.
According to the Tax Policy Center, a left-leaning think tank, which in March completed an analysis of Clinton’s tax proposal, the plan would generate an additional $1.1 trillion in tax revenue. Households earning less than $300,000 would see little to no change in their federal income taxes, according to the analysis.

Donald Trump

 

At the core of Donald Trump’s plan are tax cuts for everybody — with an emphasis on corporations and middle- and high-income Americans. Trump says he will reduce the number of tax brackets to three from the current seven.
Under his plan, the new tiers would be:

  • 12% (married filing jointly households earning less than $75,000)
  • 25% (married filing jointly households earning between $75,000 and $225,000)
  • 33% (married filing jointly households earning more than $225,000)
    *Brackets for single filers would be half of these amounts.

The Trump plan would also increase the standard deduction for joint filers to $30,000, from $12,600, and the standard deduction for single filers to $15,000. His plan would also eliminate the death tax (aka. the estate tax) and gift taxes.
Trump’s plan would reduce the nation’s income by about $4.4 trillion to as much as $9.5 trillion over the next decade, according to several independent research groups. It would also mean increased income for all income levels, with the largest gain going to the top 1%. The top bracket could see its average annual income boosted by as much as 16%, while the bottom 80% would see a 0.8% to 1.9% rise according to the Tax Foundation. The Tax Policy Center estimates that Trump’s plan could increase the national debt by as much as 80% if it isn’t counterbalanced with huge spending cuts.

Housing

Hillary Clinton

 

Hillary Clinton’s proposed policies include a $25 billion investment in housing. She plans to offer a federal match of up to $10,000 for savings going toward a down payment for people who earn less than the median income in their area. She also plans to increase access to “lending in underserved communities, support housing counseling programs and police abuse and discrimination in the mortgage market.”

Clinton says she will raise support for affordable rental housing and wants to motivate communities to try land-use strategies that may make it easier to build lower-cost rental housing near businesses. Clinton says she will also make efforts to expand living options for recipients of housing vouchers.

Donald Trump

 

Donald Trump doesn’t have a housing policy outlined on his campaign site.

Make sure to register to vote by Oct. 14.

Illustrations by Kelsey Wroten.

Read more about their stances on college costs, health care, and family leave here > 

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

TAGS: , , , , , ,

Advertiser Disclosure

Featured

MagnifyMoney: 2016 Housing Affordability Study

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Housing Affordability Study

As the cost of housing soars ever higher and household earnings remain stubbornly stagnant, how realistic is homeownership for young people today?

Saving up for a new home can feel like an endless slog for young working Americans. The upfront costs alone — the down payment, closing costs, property taxes, etc. — are enough to scare off prospective buyers who are struggling to make ends meet.

Just over one-third of Americans under age 35 owned homes as of mid-2016, down 12% from 2010, according to U.S. Census data. While homeownership rates fell across all age groups during that same period, none experienced a steeper drop-off than the under-35s.

MagnifyMoney wanted to figure out how realistic homeownership is for young Americans today — that is, how long it would take them to save up for a new home in their area if they started saving now.

Calculating Home Affordability

Our analysis revealed two different sets of buyers — those who can afford the cost of a new home in their area and those who cannot. Affordability was largely driven by a worker’s ability to qualify for a mortgage loan large enough to cover the cost of a median-priced home in their metro area. Given these two different cases, we used two methods to determine how long it would take these groups to save for a home.

For buyers who can’t afford a large enough mortgage:

We assumed that the borrower can spare 35% of their monthly income toward mortgage-related payments. Based on this amount and the current interest rates for a 30-year fixed-rate mortgage, we calculated the total mortgage that the borrower can afford to take.

We then took the mortgage amount they would qualify for and subtracted it from the cost of a median-priced home in their area to find the mortgage gap they need to fill. Then, we added other necessary upfront costs: 4.5% closing costs and a standard emergency cash reserve equal to one month’s mortgage payment.

We determined, based on the median income for their age, how long it would take to save that amount, assuming a 20% savings rate.

Example:

We estimate a 25 to 44 year-old homebuyer in Salinas, Calif., would reasonably qualify for a $275,385 mortgage. A median-priced home in Salinas, Calif., costs $750,000. So, she would have to save at least $474,615 to fill the mortgage gap. On top of that, she would pay another $33,750 in closing costs (assuming an estimate of 4.5%) and need to set aside a $1,274 emergency cash reserve.

In total, she would need to come up with $509,612 to be able to buy a home in her area. If she saved 20% of her income toward that goal, it would take her 46.75 years.

For buyers who can afford a large enough mortgage:

Once again, we assumed that the borrower can spare 35% of their monthly income toward mortgage-related payments. Based on this amount and the current interest rates for a 30-year fixed-rate mortgage, we calculated the total mortgage the borrower can afford to take.

We then determined how much they’d need to save for a 20% down payment. We added to that the cost of closing costs and a one-month mortgage reserve.

For example:

A median-priced home in Johnstown, Penn., costs $74,900. So this buyer would have to save at least $14,980 to cover a 20% down payment. On top of that, he would pay another $3,370 in closing costs (assuming an estimate of 4.5%) and set aside $1,370 in an emergency cash reserve.

In total, he’d need to save $19,720. Saving 20% of his income toward this goal, it would take him 1.85 years.

Key Findings

  • Get ready for the long haul: Of the 380 metro areas we analyzed, we found no place in America where a worker of any age group could realistically save up for a new home in less than a year.Across all 380 metro areas analyzed…
    • 45 to 65 year-olds would need an average of 4.69 years to save for a home.
    • 25 to 44 year-olds would need an average of 5.63 years to save for a home.
    • 15 to 24 year-olds would an average of 27.2 years to save for a home.
  • Where homeownership is completely out of reach:
    • In 20.79% of metros (79 out of 380), workers of all age groups wouldn’t be able to qualify for a mortgage loan large enough to cover the cost of a median-priced home.
    • 15 to 24 year-olds wouldn’t qualify for a mortgage loan large enough to cover the cost of a median priced home in 357 out of 380 metros analyzed (93.95%).
    • 25 to 44 year-olds wouldn’t qualify for a mortgage loan large enough to cover the cost of a median-priced home in 68 out of 380 metros analyzed (17.89%).
    • 45 to 65 year-olds wouldn’t qualify for a mortgage loan large enough to cover the cost of a median-priced home in 29 out of 380 metros analyzed (7.63%).

The least and most affordable metros for 25 to 44-year-olds

25-44-The-Most-Easiest-Places
25-44-The-Most-Difficult-Places

A closer look at the housing market for 25 to 44-year-olds:

  • The most affordable metro area: Johnstown, Penn., is the easiest place for 25 to 44 year-olds to save for a home. The key: Affordable housing is in abundance. A median-priced home in Johnstown is $74,900. With a goal of saving enough to cover a 20% down payment, closing costs, and a one-month mortgage payment reserve, the total amount workers would need to save is $19,720. Earning the median annual income for that area of $53,164, they would need just 1.85 years to save.
  • The least affordable metro area: Salinas, Calif., is the most difficult metro area for 25 to 44 year-olds dreaming of homeownership. Earning the median annual salary of $54,499 and looking at a median-priced home listed at $750,000, they would need a staggering 46.75 years to save up enough. The reason? On an annual household income of $54,499, a homebuyer would only realistically be able to qualify for a $271,000 30-year fixed-rate mortgage loan, leaving a half-million-dollar gap to fill.
  • Midwest is best: 9 out of the 10 most affordable metro areas are located in the Midwest, where housing prices are significantly lower compared to other regions. On average, it would take just 2.28 years for a 25 to 44 year-old to save for a home in the 10 most affordable metros.
  • California is where homeownership dreams go to die: 9 out of the top 10 most expensive metro areas for 25 to 44 year-old homebuyers are in California.
    • The average time needed to save for a home in the top 10 most expensive metro areas is a whopping 29.15 years.
    • It would take 25 to 44 year-olds at least three years to save for a home in 7.37% of metro areas.
    • It would take 25 to 44 year-olds between three and five years to save for a home in 53.16% of metro areas.
    • It would take 25 to 44 year-olds between five and 10 years to save for a home in 34.47% of metro areas.
    • It would take 25 to 44 year-olds more than 10 years to save for a home in 5.00% of metro areas.

The least and most affordable metros for 45 to 65-year-olds

45-65-The-Most-Easiest-Places
45-65-The-Most-Difficult-Places

A closer look at the housing market for 45 to 65-year-olds:

  • The most affordable metro area: Danville, Ill., is the easiest place for 45 to 65 year-olds to save for a home today. A median-priced home in Danville is $68,200. With goal of saving enough to cover a 20% down payment, closing costs, and a one-month mortgage payment reserve, the total amount workers would need to save is $18,012. Earning the median annual income for their age group in that area ($51,975), they would need just 1.73 years to save.
  • The least affordable metro area: Homeownership dreams don’t get any more realistic with age in Salinas, Calif. It is also the most difficult metro area for 45 to 65 year-olds dreaming of homeownership. Even though this age group earns a median income 22% higher than 25 to 44 year-olds in this area, it would still take them nearly three decades (28.98 years) to save up for a median-priced home of $750,000. On an annual household income of $70,368, a 45 to 65 year-old homebuyer would only realistically be able to qualify for a $377,567 30-year fixed-rate loan, leaving a massive gap to fill — even without including closing costs and a one-month mortgage reserve.
    • It would take 45 to 65 year-olds at least three years to save for a home in 16.32% of metro areas.
    • It would take 45 to 65 year-olds between three and five years to save for a home in 57.37% of metro areas.
    • It would take 45 to 65 year-olds between five and 10 years to save for a home in 23.16% of metro areas.
    • It would take 45 to 65 year-olds more than 10 years to save for a home in 3.16% of metro areas.
  • Midwest is best: 9 out of the 10 most affordable metro areas for 45 to 65 year-olds are also located in the Midwest, where housing prices are significantly lower compared to other regions.
    • On average, it would take just under three years (2.08) to save for a home in the 10 most affordable metros.
  • The California struggle: 9 out of the top 10 most expensive metro areas for 45 to 65 year-old homebuyers also are in California.
    • The average time needed to save for a home in the top 10 most expensive metro areas for this age group is a whopping 19.72 years.

The least and most affordable metros for 15 to 24-year-olds

15-24-The-Easiest-Places
15-24-The-Most-Difficult-Places

A closer look at the housing market for 15 to 24-year olds:

Of course, we don’t know many 15-year-olds who are shopping around for a single-family home these days, but U.S. Census Bureau data limited us to this age range. However, our findings still shine a light into the challenges facing the youngest homebuyers.

  • It would take 15 to 24 year-olds at least three years to save for a home in 0% of metro areas.
  • It would take 15 to 24 year-olds between three and five years to save for a home in 1.58% of metro areas.
  • It would take 15 to 24 year-olds between five and 10 years to save for a home in 23.42% of metro areas.
  • It would take 15 to 24 year-olds more than 10 years to save for a home in 75.00% of metro areas.
  • The most affordable metro area: Sheboygan, Wisc., is the easiest place for 15 to 24 year-olds to save for a home today. Although median-priced homes are relatively more expensive in Sheboygan ($134,900) than other inexpensive metro areas on this list, young workers there earn relatively higher salaries, which enables them to save more toward future home costs. With a goal of saving enough to cover a 20% down payment, closing costs, and a one-month mortgage payment reserve, the total amount workers would need to save is $33,877. Earning the median annual income for their age group in that area ($38,510), they would need just 4.40 years to save.
  • The least affordable metro area: Santa Cruz-Watsonville, Calif., isn’t simply a difficult place for young workers to save for a home — it’s pretty much impossible. On an annual household income of $21,178, a 15 to 24 year-old homebuyer would only realistically be able to qualify for a $36,506 30-year fixed-rate mortgage loan. With a median-priced home listed at $769,500, their mortgage loan would hardly make a dent. They would need 181.27 years to save enough to fill in that gap.
    • In the 10 most expensive metros, it would take 15 to 24 year-olds an average of 129.53 years to save for a home.
  • Things look much better in the South and Midwest: The 10 most affordable metro areas for 15 to 24 year-olds are also located in the Midwest and the South, where housing prices are significantly lower compared to other regions.
    • On average, it would take just under five years (4.79) to save for a home in the 10 most affordable metros.
  • Surprisingly expensive metros for 15 to 24 year-olds:
    • While 6 out of the 10 most expensive metro areas are located in California, there were some surprising findings in other states.
      • The 4th most expensive metro is Corvallis, Ore. Home prices are half as high as the most expensive metros on this list, but median incomes for this age group are among the lowest: $12,369.
      • Morgantown, W.Va., is the 6th most unaffordable metro for the youngest workers. 15 to 24 year-old workers in Morgantown earn among the lowest median incomes in the 380 metros we analyzed: $8,805.

Housing Affordability Calculator

Find out how long it would take you to save up for a home in your area.

Calculator Embed Code:
<iframe id=”home_afford” src=”//magnifymoney.com/calculator/home-affordability-calculator” width=”100%” height=”362″ frameborder=”0″></iframe>

Download the data behind this report:

Data analysis was conducted by Naveen Agarwal, MagnifyMoney Senior Data Analyst.

Metro Rankings for Ages 15 to 25

Metro Rankings for Ages 25 to 44

Metro Rankings for Ages 45 to 65

Metro Rankings for Ages 65 and Up

Metros by State: Searchable Database

Full Study Data

Appendix/Data Sources

Home prices: June 2016 median listing prices data provided by Zillow

Median income: Annual household income by age group and metropolitan area for 2014: U.S. Census Bureau.

Real Estate/Property Taxes: Real estate taxes for owner occupied units for metropolitan areas: U.S. Census Bureau

Mortgage interest rate: Bankrate.com National average on a 30-year fixed rate mortgage is 3.57% as of Sept. 1, 2016.

Downpayment: We assume a downpayment of 20%.

Savings rate: We assume homebuyers would save 20% of their annual take-home pay.

Closing costs: We assume closing costs of 4.5%.

Home Insurance rates by metro area: National Association of Insurance Commissioners (NAIC)

Mandi Woodruff
Mandi Woodruff |

Mandi Woodruff is a writer at MagnifyMoney. You can email Mandi at mandi@magnifymoney.com

TAGS: , , ,